A Never Ending Interpretation of Elasticity
Formula: Energy Growth / Economic Growth
Definition 1 Environment: Percentage change in energy consumption to achieve one percent change in GDP
Example: India, 8% Econ growth, 4% Energy growth: Energy Elasticity: 0.5
Interpretation: This is as expected, we are sustainable, our economy grow but our energy usage is low
Definition 2 Economy: Percentage change in GDP to achieve certain change in energy consumption growth
Example: China, 10% Econ growth, 15% Energy growth: Energy Elasticity: 1.5
Interpretation: This is as expected, we are growing our economy
Definition 3 Politics:
Example: Indonesia, 6% Econ growth, 4% Energy growth: Energy elasticity: 1.5
When someone knows that economy getting bad (e.g 4%)
Interpretation A: This is good, our elasticity is 1 now, our energy is efficient. Moreover, this energy growth will affecting the future economy growth.
Interpretation B: This is good, our energy development is still growing.
Interpretation C: This is bad, is not efficient, we expecting to get <1 elasticity
Well, the same argument might be use from Infrastructure point of view. That infrastructure development will help economic growth.